The Time Is Now To Invest In Coworking Office Spaces

While real estate has historically been a great investment option, of late there has been another lucrative reason… the unprecedented rise in its prices over the past few years,

which affects the time for the investors to invest in coworking space, especially in commercial projects.

Rentals have stayed constant in Bengaluru, and have fallen in Mumbai.

This can be attributed to the demand for residential projects having fallen regularly over the past decade. It is mainly because of the stalled or delayed projects.

Unless looking at residential investments for end-use, investors instead are more optimistic about investing in commercial projects. But does it make sense for retail investors to invest in commercial projects?

Let’s find out.

1. Demand

Despite the slowdown in realty caused by the pandemic since last year, various market indicators have pointed toward continuous commercial improvement.

These include absorption, increase in rentals, and capital value.

The reasons that drive demand are:

• MNCs have set up development centers, back-office operations, and research facilities in cities like Gurugram, Noida, Hyderabad, Bengaluru, etc.
• Steady demand for large office spaces is impacting commercial realty positively.
• Post the pandemic, satellite office spaces and coworking spaces have been in great demand to support the new hybrid work model. This is going to be a new way of working going forward.

Therefore, commercial real estate is not only seeing an upswing in the major commercial hotspots but also in tier-2 towns.

2. Supply

Since the work and shopping dynamics have changed greatly since the start of 2020, the inventory supply has adapted to keep up with the demand.

The instant, adapted supply has driven the demand further:

• Grade-A commercial real estate or premium office spaces make up for the biggest chunk of the demand.
• MNCs, look for well-managed spaces.
• Developers of grade-A commercial projects ensure that the properties are equipped with the latest IT support, best amenities, etc.
• Coworking spaces are tapping into the requirements of smaller set-ups and individuals. They are giving a world-class experience at nominal rates. IT, cafeteria services, parking, etc, are well taken care of.

In fact, coworking spaces are not limited to metros anymore. Smaller emerging commercial places are also making way for coworking spaces.

What You Should Do

While any investment comes with its own set of risks, it pays to do your due diligence and remember the points before investing in coworking spaces.

Research on the developer: Understand the timeliness of the projects undertaken by the developer in the past. Delivering on or before time is paramount.

Location of the project:  This is as important as the above point. The location must have a commercial/office space viability.

To understand this, study the offices and the nature of the companies in the neighborhood.

Payment plan: Clearly understand the terms of payment offered. Understand if there are any hidden costs.

This is crucial because a lot of times the amount on paper may inflate to an unaffordable sum over a period.